SUPPLEMENT TO THE FIDELITY FREEDOM FUNDS SM
MAY 20, 1997
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 2.
(iii) Each fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which Fidelity
Management & Research Company or an affiliate serves as investment
adviser or (b) by engaging in reverse repurchase agreements with any
party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). Each fund will not
borrow from other funds advised by Fidelity Management & Research
Company or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"INVESTMENT PRACTICES OF THE UNDERLYING FIDELITY FUNDS" SECTION ON
PAGE 10.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, each fund has received permission to lend
money to, and borrow money from, other funds advised by FMR or its
affiliates. Interfund loans and borrowings normally extend overnight,
but can have a maximum duration of seven days. Loans may be called on
one day's notice. A fund will lend through the program only when the
returns are higher than those available from an investment in
repurchase agreements, and will borrow through the program only when
the costs are equal to or lower than the cost of bank loans. A fund
may have to borrow from a bank at a higher interest rate if an
interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or
additional borrowing costs.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"PERFORMANCE" SECTION ON PAGES 18 AND 19.
YIELD CALCULATIONS. Yields for a non-money market fund are computed by
dividing the fund's interest and dividend income, if any, for a given
30-day or one-month period, net of expenses, by the average number of
shares entitled to receive distributions during the period, dividing
this figure by the fund's NAV or offering price, as applicable, at the
end of the period, and annualizing the result (assuming compounding of
income) in order to arrive at an annual percentage rate. Yields do not
reflect a fund's short-term trading fee, if any. Income is calculated
for purposes of yield quotations in accordance with standardized
methods applicable to all stock and bond funds. Dividends from equity
investments are treated as if they were accrued on a daily basis,
solely for the purposes of yield calculations. In general, interest
income is reduced with respect to bonds trading at a premium over
their par value by subtracting a portion of the premium from income on
a daily basis, and is increased with respect to bonds trading at a
discount by adding a portion of the discount to daily income. For a
fund's investments denominated in foreign currencies, income and
expenses are calculated first in their respective currencies, and are
then converted to U.S. dollars, either when they are actually
converted or at the end of the 30-day or one month period, whichever
is earlier. Capital gains and losses generally are excluded from the
calculation as are gains and losses from currency exchange rate
fluctuations.
Income calculated for the purposes of calculating a non-money market
fund's yield differs from income as determined for other accounting
purposes. Because of the different accounting methods used, and
because of the compounding of income assumed in yield calculations, a
non-money market fund's yield may not equal its distribution rate, the
income paid to your account, or the income reported in the fund's
financial statements.
In calculating a fund's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in
order to reflect the risk premium on that security. This practice will
have the effect of reducing the fund's yield.
To compute a money market fund's yield for a period, the net change in
value of a hypothetical account containing one share reflects the
value of additional shares purchased with dividends from the one
original share and dividends declared on both the original share and
any additional shares. The net change is then divided by the value of
the account at the beginning of the period to obtain a base period
return. This base period return is annualized to obtain a current
annualized yield. A money market fund also may calculate a compound
effective yield by compounding the base period return over a one-year
period. In addition the current yield, a money market fund may quote
yields in advertising based on any historical seven-day period. Yields
for a money market fund are calculated on the same basis as other
money market funds, as required by regulation.
Yield information may be useful in reviewing a fund's performance and
in providing a basis for comparison with other investment
alternatives. However, each fund's yield fluctuates, unlike
investments that pay a fixed interest rate over a stated period of
time. When comparing investment alternatives, investors should also
note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
a fund's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates a fund's yield will
tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to a fund from the continuous sale of its
shares will likely be invested in instruments producing lower yields
than the balance of the fund's holdings, thereby reducing the fund's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.
